Title : Airport Compe on: The European Experience Author : Peter Forsyth.
David Gillen.
Jurgen Myller, & Hans-Mar n Niemeier Publisher : Ashgate Publishing Limited, 2010 Book Reviewer : Garry Gumelar Pratama* DOI : h ps://doi.
org/10.
22304/pjih.
The compe ve business environment in avia on industry has changed since European Integra on.
Not only airlines become more compe ve a er such integra on, but also other main infrastructure of avia on, such as airports.
At the Arst stage of regional development, compe on in airport industry seems to be impossible due to clear jurisdic onal boundaries between all countries in the The other side of the coin is that airport compe on becomes an important issue in a more integrated region, such as European Union (EU).
This occurs because an airport owner from another country can buy other airports outside its state jurisdic on as long as the airport is under the same region.
Moreover, the ar cles in this book prove the claim of the existence of airport compe on.
Under the introductory part, the editors outlined three cases from EU: United Kingdom (UK) Civil Avia on Authority ac on to Heathrow Airport in 2008.
Blocked Takeover of Bra slava Airport 2006.
and European Commission Prohibi on on Subsidies to Ryanair by Brussels South Charleroi Airport 2004.
All of the cases are inevitable proofs that airport compe on undoubtedly exists in Europe.
The airport priva za on triggered airport compe on trends, and this began back in 1987 when Bri sh Government priva zed three London Airports as well as several Sco sh Airports.
According to Chris ane Myller-Ros n .
), the priva za on model used by the Bri sh Government was considered as a success and shortly became a role model in EU.
From 1990 onwards, a number of European Airport were priva zed, included among them were airports in Brussels.
Budapest.
Malta.
Paris, and Vienna.
Now the majority of airports in EU are priva zed.
Although UK had declared that they quit EU membership .
s widely known under the 'Brexit' ter.
UKAos prac ce in airport compe on is s ll relevant to be learned.
Considered successful in achieving several posi ve changes in providing more proAt, enhancing regional development, crea ng more employment opportuni es, and boos ng PADJADJARAN Jurnal Ilmu Hukum Volume 4 Nomor 1 Tahun 2017 [ISSN 2460-1.
-ISSN 2442-9.
* Lecturer at Interna onal Law Department Fakultas Hukum Universitas Padjadjaran.
(Universitas Padjadjara.
(Universitas Padjadjara.
Book Review: Airport Compe on: The European Experience tourism growth, the Bri sh Airport Priva za on model is one of UK legacy to EU airports industry.
The more robust airports compe on are, the less business monopoly emerge between them.
A monopoly can exist where there is only an airport in the city or region and the nearest airport is too far to provide a compe ve environment for intercity Cight.
On the other hand, the compe on is not signiAcant in the long haul Cight, where airlines can choose landing point event the distance between airports are quite far.
Monopoly market of the airports may broadly vary and among them are monopoly in providing airlines/carriers base, duty-free shop, hub traEc, and other airport services.
The objects of the monopoly are airliners and passenger a rac on to use one airport only.
Airport compe on, as well as airport monopoly, is the main research object of the contributors to this book.
The scholarly works of various contributors are grouped under four main headings/part.
Wri ngs in Part A deals with how do airports compete and how robust the compe on is.
Part B consist of wri ngs which analyze how do travelers choose an airport and how does this aAect the compe ve process.
Part C deals with providing an academic view of real cases of airport compe on.
Last but not least.
Part D consists of works in reviewing emerging process of airport and compe on policy issues in EU region.
These parts can provide evidence to convince the readers of this book that legal issues of airport compe on really exist in EU airport industry.
Nine contributors published their works under Part A, among them were Peter Morrell.
Eric Pels.
Erik T.
Verhoef, and Kenneth Bu on.
Morrell described the systema c impact of compe on.
Model shi ing from government owned airports to private owned airports ini ates a chain reac on that leads to monopoly protec on plan by government .
r regional authori es on the regional leve.
According to MorrellAos assessment.
EU and UK Government have done the math.
Ar cle 87 of Treaty Establishing the European Economic Community has served as a legal norm that protects EU member states from distor on of compe ve market.
MorrellAos descrip on was further enriched by Pels and Verhoef contribu on.
mul -airport region compe on, airports compete for passengers and as the consequence airport charges are lowered, yet s ll above marginal cost.
At the end, airlines have to be more compe ve, thus the airline price is lowered.
Furthermore in Chapter 5.
Kenneth Bu on provided answers for Part A by explaining the interac on between airlines and airports, in par cular the ability of airlines to limit poten al market power.
Airlines are one of the countervailing powers for airport Systema c deregula on of airline market in the United States of America in late 1970s created new business pressures to airlines in increasing compe veness, especially in opera ng cost.
Accordingly, the reduc on of airline cost demanded the government to make changes in airport charging and investment PJIH Volume 4 Nomor 1 Tahun 2017 [ISSN 2460-1.
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A broader perspec ve for readers lies under Part B through the works from Stephane Hess.
John W.
Polak, and Marck Gaudry.
Hess and PolakAos study conArmed that travelerAos choice has li le impact on airport compe on, since passengers have strong preference for their nearest .
ocal airpor.
Passengers were willing to pay high price only to Cy from their local airport.
In addi on to Hess and PolakAos ar cles.
Marc Gaudry contributed with an ar cle tled AuImproved Modelling of Compe on among Airport trough Flexible Form and Non-Diagonal Demand Structures Explaining Flows Registered within a New TraEc Accoun ng Matrix.
Ay Gaudry used accoun ng discipline to create a model of the demand for avia on and airport Works published under this part is needed in order to broaden reader with a legal background.
Part C of this book gives case study of airport compe on in Europe.
Although all ar cles in this part are wri en by non-legal background, lawyers and legal researcher can read Part C in order to understand mul discipline approach to airport compe on problems.
Robet Malina came out to the conclusion that economic regula on of airports is unnecessary if intermodal compe on .
arket power of an individual airport vis a vis with other airport.
market forces are strong Otherwise, airport regula on is not mandatory.
Half of 35 airports in Germany analyzed by Malina have strong intermodal compe on.
This condi on is diAerent with Greece as explained by Andreas Papatheodoru.
The conclusion of his research showed that airport compe on in Greece is far from being eAec ve because most of commercial airports in the country are s ll owned by state.
Greece government policy is more conserva ve than the UK.
David Starke stated that UKAos condi on illustrated the ability of airport industry to evolve to a compe ve UKAos case also showed that compe ve framework is an achievable objec ve for na onal airport policy.
Airport compe on has strong es with public policy and also law, extensive analysis of the issue can be found in Part D.
The part begins with Forsyth and NiemerAos research in the UK, where Bri sh Airport Authority (BAA) has been cri cized for what happened in London's airports (Heathrow.
Gatwick, and Stanste.
As the owner of the three airports at that me.
BAA was responsible for inadequate capacity, being too crowded, poor quality services, high cost, and high charge in the airports.
It was not un l 2006 where the revolu on of airport priva za on begun.
Grupo Ferrovial took over BAA in 2006 and this was the beginning of airport compe on in the UK and even in Europe.
The breakup of BAA allowed compe on between London's airports.
As the result of compe on, performance of each airport in London had signiAcantly improved.
The posi ve result pushed over UK Compe on Commission to recommend BAA to sell its 2 of 3 airports in London.
Based on the case.
Forsyth and Niemer said that separate Book Review: Airport Compe on: The European Experience ownership of London airports and compe on between them could improve their performance and eAec ve regula on will need to be very well designed.
Furthermore, eAec ve regula on is also needed in order to an cipate future trends in airport compe on, e.
airports alliance trend.
Airlines alliances have long been known in avia on industry and have been proven very eAec ve.
Same consolida on mechanism may also happen between airports, cons tu ng so-called "Airports Alliance".
According to Forsyth.
Niemer, and Wolf in other wri ng under Part D, such consolida on between airports were possible to happen and public policy had to be present to ensure healthy compe ve environment.
Unlike consolida on using merger and/or acquisi on, strategic alliance between separately owned airports is a decentralized system, in which alliance partners consolidate their strategy while s ll remain independent from each other.
Partner in the alliance decided opera on according to its own will but commits to take considera on of other partners in same me.
On the other hand, merger and acquisi on created group of airports under common ownership.
This system is a centralized system, which means decision making is in hierarchical structure from the owner to all airports.
Forsyth.
Niemer, and Wolf did not place their focus on the merger and acquisi on mechanism since, unlike airlines, merger and acquisi on of airports will not gain substan al economic beneAt.
The most important part for readers with law background lies in Hans Kristoferitsch publica on under Part D.
He gives legal perspec ve on compe on threat from government.
Compe on between business en es can be interrupted by Anancial market interven on from a member state.
EU tried to hinder the distor on eAect to compe on by using Ar cle 87 of Treaty Establishing the European Economic Community.
State aids to airline were generally banned in Europe, however unique case emerged in Belgium in 2004, when diAerent mechanism of state aid introduced by Low-Cost Carrier (LCC) serving regional In this case, the government gave its Anancial support to regional airport and regional airport used the support to give facili es to a speciAc LCC company.
The main actors of the case were Ryanair .
s LCC provide.
The Wallon Region .
s public authority in Belgium as well as the owner of airport infrastructure.
, and Brussels South Charleroi Airport/BSCA .
s a company controlled by Wallon Region with a concession to manage South Charleroi airport for 50 year.
In November 2001.
Ryanair nego ated contracts between Wallon Region and BSCA.
Under the contract between Ryanair and Wallon Region.
Ryanair was en tled to 50% landing charges for 15 years.
The fee is not calculated by weight of an aircra but based on passenger In another contract between Ryanair and BSCA.
Ryanair could get a beneAt including: EUR 1 per passenger ground handling fees instead of normal EUR 10 per one-shot EUR 250.
000 for hotel cost and staA subsistence.
EUR 160.
PJIH Volume 4 Nomor 1 Tahun 2017 [ISSN 2460-1.
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for each new route opened by Ryanair.
EUR 4.
000 for oEce equipment.
free oEce and free hangar use.
These contracts indicated a viola on under Ar cle 87 of Treaty Establishing the European Economic Community, and thus European Commission took ac on.
European Commission decided that the substan al fund to a ract Ryanair to Brussels South Charleroi Airport and aid granted by Wallon Region for Ryanair only were illegal state aid under Ar cle 87 of Treaty Establishing the European Economic Community.
For aid granted by BSCA.
European Commission decided that selec ve reduc on of ground handling fees and opera onal aid for Ryanair were incompa ble with common market.
Yet start-up aid, including mee ng contribu ons, one-shot incen ves, and free oEce space were s ll compa ble with common market.
The principles laid out by European Commission in the case were reAned in 2005 Community Guidelines document.
Under the instrument, airports are grouped into four categories and only airport that fall into a speciAc category can get a state aid.
Although this guideline is not legally binding to member states or companies in Europe, the guideline is vital for European Commission itself in deciding future cases.
All in all, this book is recommended for readers, both academician and prac oner in Indonesia as the power house country of Associa on of South East Asian Na ons (ASEAN).
The book can provide a lesson learned source which can give a glimpse about the future avia on in ASEAN if the region becomes more The readers will realized that airport compe on is impossible to occur at the Arst stage of regionalism, because the airports are s ll under one country jurisdic on or they are mostly owned by a government.
However, in the more advanced stage of regionalism, where jurisdic onal boundaries and a por on of state sovereignty are given to suprana onal en es, compe on becomes Airports in EU are now under such stage and condi on that make it feasible to iden fy compe on between them.
EU as suprana onal power plays role in the airport compe on by providing integrated regional law and policy to govern This book was published in 2010, prior to UK declara on to exit EU.
As this book contains useful material for further research in airport compe on, future improvement should be focused on the implica on of Brexit to airport compe on law and policy.
Consequently, it is important as well as interes ng if more researchers contribute to this publica on by adding further research on the ma ers.